Fed: Economy Improved Modestly Late Last Year

The Federal Reserve said on Wednesday the U.S. economy continued to expand modestly through the end of 2011 as holiday spending proved robust, but a weak job market was still preventing incomes from rising.

In its Beige Book report of anecdotal information on business activity collected from contacts around the country, the U.S. central bank said the outlook was one of steady if slow improvement.

"Reports on consumer spending were favorable in general," the report said. "Consumer spending and confidence generally were characterized as firmer than in recent reporting periods."

The evidence also suggests inflation is not a major concern, with many districts reporting that upward pressures on prices from high commodity prices had eased significantly.

"The combination of limited permanent hiring in most sectors and numerous active job seekers has continued to keep a lid on general wage increases," the Beige Book report said.

(Reporting By Pedro Nicolaci da Costa and Mark Felsenthal; Editing by Gary Crosse)